Third quarter negative growth may signal start of recession

Real gross domestic product (GDP), as expected, edged down 0.2% in the third quarter, the first quarterly decline since 1992, Statistics Canada reports. Two straight quarters of negative growth officially signal a recession.

Including this decline, GDP growth has averaged 0.2% over the past four quarters It averaged 1.1% over the preceding four.

Exports fell for the fourth consecutive quarter. Businesses drew down inventories. Corporation profits, stated on a nominal basis, fell 13.9%, the second consecutive quarter of decline. Reduced profits were widespread with significant declines in the oil and natural gas extraction, transportation services, manufacturing and retail trade industries.

"Evidence of deterioration in consumer and investor confidence appeared in the period following the events of September 11. However, these events were intermixed with the general slowdown in the Canadian economy in the third quarter," Statistics Canada’s Daily Bulletin stated.

Exports fell 2.0% in the third quarter, marking the fourth consecutive decline. This is the longest string of quarterly declines in more than two decades. Exports of telecommunications equipment, which contributed strongly to growth in 2000, dropped to one-half of the peak they reached in the fourth quarter of last year. Exports of automotive products slid 3.2%. Spending on travel by foreign visitors to Canada fell, reflecting a 7.4% drop in the number of visitors to Canada in the quarter.